The Motor Industry Staff Association (MISA) says a number of dealerships and retail stores have announced their intent to restructure, which could lead to a spate of retrenchments in the automotive sector.

MISA says it has been given notice of the proposed closure of 11 retail stores linked to an international tyre producer. 

The association says the producer “believes it is no longer viable to keep its doors open in South Africa, due to the cost of doing business and the shrinking economy that has taken a toll on the tyre industry”.

MISA operations CEO Martlé Keyter says the notice from the tyre producer comes after 53 MISA members were retrenched at the end of September, owing to the closure of three vehicle dealerships in Gauteng.

“A third large dealership group has also given notice of restructuring at 11 dealerships nationwide. 

“It is unsure at this stage how many employees will be affected.”

According to Keyter the automotive retail industry cannot continue to “survive daily loadshedding, skyrocketing fuel prices and high interest rates”.

Also, new-vehicle sales slumped again in September, with 46 021 vehicles sold, down 4.1% compared with the same month last year.

“The impact is not only limited to vehicle sales, but includes the rest of the value chain,” says Keyter.

“Economists describe the situation as the perfect storm. Households, businesses and industries are struggling under considerable pressure. Buyers are not qualifying for finance due to negative credit records.”

“The high cost of living and the declining take-home pay also have a severe negative impact on mental health, especially in a male-dominated industry that is performance driven,” she adds. 

This has led to MISA observing an uptick of suicides within the motor industry.

“Whether or not you have trouble at work, financial distress or can’t cope with overwhelming emotions, with MISA help is just a phone call away,” emphasises Keyter.

It’s a Perfect Storm – NADA

The industry is indeed experiencing a perfect storm, along with other issues such as water and infrastructure concerns, confirms National Automobile Dealers’ Association (NADA) chairperson Brandon Cohen.

“These challenging times are prompting businesses to re-evaluate their internal structures. 

“Not all restructuring is necessarily negative, as long as jobs are preserved as much as possible.”

“While the closures have been devastating,” acknowledges Cohen, he adds that NADA has witnessed new entrants into the auto sector, while also seeing growth in its own membership numbers.

“Notably, Stellantis is investing in manufacturing facilities worth over R3-billion; component manufacturers have pledged over R4.48-billion in new manufacturing investments, and naamsa | the Automotive Business Council’s members continue to invest in their operations.”

Cohen says while the current situation is “exceptionally challenging for the industry, it's not necessarily causing its demise, although it may be in a state of ‘high care’.”

There is hope for improvements, with increased power availability through improvements at the Kusile, Koeberg, and Medupi power stations; decreasing oil prices; and inflation staying within the Reserve Bank’s target range, which may indicate a positive trend in the industry's future.”

Cohen adds that the South African auto sector, especially the retail sector, has a history of resilience, having weathered challenges like the 2008 global financial crisis and the Covid-19 pandemic.